Euro Trades Near Record High Against Yen on ECB Rate Outlook

The euro traded near a record high against the yen on speculation the European Central Bank will raise interest rates this year to stem inflation.

The 13-nation currency rose from a seven-week low against the dollar yesterday after Financial Times Deutschland said the ECB will lift forecasts for inflation and economic growth. The ECB will lift its benchmark rate tomorrow to 4 percent from 3.75 percent, according to all 52 economists surveyed by Bloomberg News.

``The ECB will continue to be hawkish,'' said Greg Anderson, a senior currency strategist in Chicago at ABN Amro Bank NV. ``They need to raise rates three more times to 4.5 percent by year-end. The rate outlook won't hurt the euro at all.''

The euro traded at 164.25 yen and $1.3489 at 6:15 a.m. in Tokyo. It reached 164.36 yen yesterday, the highest since its debut in January 1999. The euro gained 0.3 percent versus the dollar yesterday, rebounding from $1.3392 on June 1, the lowest since April 10.

The 13-nation European currency has gained 4.5 percent against the yen and 2.2 percent versus the dollar since the start of the year. The euro reached a record high of $1.3681 on April 27. It may advance to 166 yen and $1.4 by December, according to Anderson.

Euro Trades Near Record High Against Yen on ECB Rate Outlook

6/4/2007 8:57:22 PM